Robert and Angela are newlyweds, and they are considering buying their first home now that the wedding
Question:
Robert and Angela are newlyweds, and they are considering buying their first home now that the wedding is behind them, and they are settled into their careers. Robert is a teacher and Angela works in marketing. They are currently living with Angela’s parents and are looking at buying a townhouse close to the school where Robert teaches. Angela works from home, but she will have to travel to the office a couple of days a week.
They are meeting with their financial advisor at the bank to get an idea of what they can afford to spend on a home. They have been working hard to save towards their down payment. They have $90,000 from savings and wedding gifts and it is equally split between each of their Tax-Free Savings Accounts.
They have provided you with the following information about their current financial situation:
1. The current 5-year fixed mortgage rate is 4.1%. If the current Bank of Canada 5-year rate is 5.25%, how much would they qualify for now assuming they must pass the stress test?
2. If they spend the maximum, will they need a high-ratio mortgage (GE or CMHC insurance)?
3. Explain to Robert and Angela, what creditors look for when they apply for a mortgage?